working capital. Hanley has experienced significant growth in sales and is having difficulty estimating its bad debt expense. During the year, the sales team has been ex
- Hanley Limited manufactures products that capture solar energy. The company plans to list its shares on the Venture Exchange. To do so, it must meet all of the following initial listing requirements (among others):
- Net tangible assets must be at least $500,000.
- Pre-tax earnings must be $50,000.
- The company must have adequate
working capital .
Hanley has experienced significant growth in sales and is having difficulty estimating its bad debt expense. During the year, the sales team has been extending credit more aggressively in order to increase their commission compensation. Under the percentage-of-receivables approach using past percentages, the estimate is $50,000. Hanley has performed an aging and estimates the
Instructions
Adopt the role of the Venture Exchange staff and decide whether the company meets the financial aspects of the initial requirements for listing on the Venture Exchange. Do remember to discuss the financial statement users and their decision-making needs. Use the analysis procedure in the image and create the case response accordingly.
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